Ultimate magazine theme for WordPress.

Proposed power increase too high

THE Lesotho Electricity Authority (LEA) says the Lesotho Electricity Company (LEC) has applied for a tariff increase of 36 percent. LEC also wants to review charges for connections, meter testing, house extensions and wiring.
While we understand that the power company has to adjust its charges to remain viable we strongly believe that the proposed review is exorbitant. Last year power tariffs were increased by 7.9 percent which was slightly about the inflation rate.
In 2011 LEA approved an increase of 17 percent. In 2010 tariffs were increased by 7.3 percent.

Now the LEC is asking for 36 percent. We understand that LEC is unlikely to be granted its wish. Historically, the LEA has always tried to strike a balance between the interests of the power company and those of the consumers. It has always tried to meet the LEC halfway. But because this time around the LEC is asking for a huge increase LEA is likely to find itself in a difficult position. If it slashes the proposed figures by a huge amount it runs the risk of being accused of crippling the power company.

If it tries to meet the power company halfway the consumers will suffer. We strongly believe this time around the authority should lean on the side of customers. According to this year’s budget inflation is projected to me be around 6.9 percent.
Any power price review above that will therefore need a very strong justification. Yet even if the power company does have strong reasons for asking for such a higher increase LEA must consider the plight of consumers.

The past two years have been particularly difficult for consumers. Prices of basic commodities have galloped beyond the reach of many households. Many families have been forced to cut on essentials because their incomes have remained largely stagnant while prices have drastically increased. Education and housing costs have increased significantly over the past 12 months.

LEA must consider that the civil servants got a six percent salary increase this year. Salaries in the textile sector, which employs just over 35 000, were increased by nine percent. We doubt that there is any company in this country that has reviewed salaries by more than 10 percent. Given these figures, it is clear that any increase above the projected inflation rate will leave the majority of consumers poorer. Companies too might not be able to sustain a huge increase on their power bills.
The industry is still trying to recover from the impact of the economic recession that hit Lesotho last year.

Many are on the verge of collapse while others have had to cut jobs to remain in business. Profit margins have been thin and volumes low. Profits have plummeted. At the same time companies have had to be content with huge increases in prices of other essential costs. This is the reality LEA has to put into consideration when it reviews the tariffs. The LEC needs to remain viable without having to leave customers out of pocket.

We must also remember that as a parastatal LEC is not driven by the pursuit of profits. It must charge enough to survive while serving the needs of the people. When its customers are hard pressed it too must make sacrifices.

Comments are closed.